BURDEN ON INDUSTRY

Wanganui Chronicle, Volume 80, Issue 257, 29 October 1937, Page 8

BURDEN ON INDUSTRY

NEW LABOUR LAWS INCREASED COSTS HEAVY TAXATION EMPLOYERS’ CRITICISM WELLINGTON. Oct. 28. The difficulties confronting industry in New Zealand as a result of recent legislation were stressed by Mr A. C. Mitchell, president of the New Zealand Employers’ Federation, in his address to the annual meeting of the federation to-day. Mr Mitchell pointed out that the legislation, including the introduction of the 40-hour week, had so increased manufacturing costs that for the first five months of this year imports had increased by over £1,000,000. • “The legislation placed upon the Statute Book of this Dominion by the present Government is all tending ir. the direction of increased costs and prices,” said Mr Mitchell. “Few would probably seriously question the sincerity of purpose or good intentions of the Government, but there i? a large and rapidly-increasing volume of public opinion which definitely challenges the statesmanship of the Government policy. We have had repeated assurances from the Prim** Minister, as official head of the Government, that their policy is designed in the interests of ,the whole of the people of the Dominion and is not designed to injure any section, but it will be obvious to any unprejudiced critic that the legislation of the present Government is not working out in accordance with that assurance.

“One of the first measures placed 1 upon the Statute Book was the imposition of the 40-hour week in Indus- , try, with provision in certain circum- . stances for exemption, but which tu- J day has become more or less universal; the restoration of tha 1931 wage cut which was forced upon the coun- < try as a measure of economic neccs- ] sity during the depression period, and i an adjustment of wage rates to en- i sure that workers should have, in < addition to the restoration of the ’ wage cut, an amount for 40 hours’ i work equal to that previously earned ] for 44 hours. It was inevitable that this legislation would result in increased costs and prices and its effect is in evidence to-day in increased rtw ] tail prices for all commodities, a condition that to a great extent cancels out the advantage to the wage-earner ' of the increased wage rates. More Imports < Manufacturing costs have risen to such an extent that the value of im- , ported goods has increased by over , £1,000,000 per month for the first five months of this year for which returns are available. ‘ln many businesses the increased taxation has resulted in 50 per cent, of the year’s total net income now being paid to the Government in land and income tax alone—an amount in excess of that available for the payment of a return to the shareholders who provide the whole of the capital in the undertaking. “Unemployment taxation to the amount of about £5,180,000 is still collected in spite of the claims of the Government that unemployment has been substantially reduced. At the end of July we still had 22,210 men on sustenance and upwards of 38,600 unemployed. “When one considers the tremendous increase in the number of men. on Public Works undertaken and financed by the Government —many ot which undertakings are regarded by thoughtful people as being of an uneconomic character —it will be realised that the claims made by the Government of their ability to absorb the whole of the unemployed in industry were not well founded, and it is open to question whether the present policy is not having a demoralising effect on the men themselves, many of whom have absorbed with zest ihe doctrine that it is a good idea to spend their earnings as they collect them and to rely upon the Government to provide out of taxation the wherewithal to carry on when they get out of a job. Instances, too, are not wanting of men who are in receipt of sustenance and relief payments who have refused work at their own trade offered to them, as being less congenial than continuing on relief work or sustenance. “For confirmation of the demoralising effect of the present system one need only consider the recent prosecutions and convictions of men making false declarations tc enable them to make illegal drawings on the funds—a scandalous disclosure which has called forth severe strictures from magistrates dealing with these cases, the most recent being that of the presiding magistrate at Auckland, who, having just dealt with 16 cases, found that 21 more were to come before him the following week. The police stated in the Dunedin Court on October 1 that the total number of cases in the Dominion up to June was 1547 —the amount involved being £7955, with several hundred more prosecutions to come. “Harbouring a Delusion” “So far as the manufacturing industries are concerned —or indeed any industry in which labour represents any appreciable proportion of the cost —one who tries to persuade himself that we can with impunity introduce the 40-hour week with the substantial increase in wage rates and other expensive concessions already granted without prejudice to our ability to compete successfully against the manufactured products of other countries working longer hours at lower rates of pay, is harbouring a delusion. “It is interesting to note that France, which adopted the 40-hour week in industry after its introducV.on by legislation in this country, is reported by cable as having been compelled to ,reconsider its 40-hour week policy as a measure of economic necessity in order to speed up production. “The high prices which are ruling at present for wool and othe" exportable commodities —the former representing an increase of £10,502,247 over the 1934-35 return and £5,067,830 over the previous year’s return—have largely offset the increased costs and I prices of other commodities by makr ing additional money available for

circulation, and to that extent has postponed the day of reckoning. Yet in spite ot the extra revenue coming into the country through that channel and the huge programme of public work in hand, wc find that unemployment is actually on the increase at present. Searching Inquiry Necessary “The effect of a drop in wool prices to the level of two years ago can readily be appreciated, and the position is such as to call for a searching examination of the problem by those in authority to ascertain and determine whether the present method of dealing with the unemployment problem, with its associated system of sustenance and relief payments, is the correct one. The true test for the cure of unemployment is surely not the placing of men on work provided by the Government, and paid for out of taxation, but by so improving the position of the manufacturing industries as to make it possible for them to absorb the men at present unemployed, in their own trade or calling or other kindred occupations to which they could readily adapt themselves. That there is room for a very large increase in the manufacturing industries is conclusively proved by the very large increase in the volume and value of goods imported during the present year, many of which could and should be produced in our own factories, but which, as a result of the present high costs, it is not possible to produce at a competitive figure, even with the present high exchange rate and duty in our favour. The restrictive character of much of the Government’s legislation, coupled with the high rate of taxation, is imposing a very severe hindrance to industrial development, and is thus accentuating the very evil which it is designed to cure. No Relief “As a non-political organisation, whose membership comprises men of all shades of political opinion, it is our definite policy not to criticise any legislation which might be introduced by the Government of the day other than that which directly affects the industrial relationships between employers and workers. In that category I am on safe ground in expressing the profound regret of the people of the country that in the preparation of the new Budget the Government made no provision for relief from the present oppressive load of taxation, but, on the contrary, the amount to be collected this year represents an increase of £10,476,000 over that collected two years ago.

“Part of this very large increase is, of course, accounted for by the improved position of the country’s finances, higher wage rates, and increase in sales tax returns, but in combination with the proposed expenditure during the current financial year by the Government of a total of £34,728,000, the impression has been created that instead of being able to look forward with confidence to a reduction in taxation industry might conceivably be called upon to pay a still larger amount of its earnings under that heading—and that condition, combined with anxiety as to the maintenance of present prices for wool and other exportable commodities, and uncertainty as to the future policy of the Government in respect to industries generally, is tending to seriously curtail private industrial development and, incidentally, slowing up the re-employment of surplus labour. “Any substantial drop in the value of wool and other exported commodities would create a position of grave financial crisis for the Dominion, and incidentally for the Government of the day. We have had experience of sharp price fluctuations in the past, and history has a nasty habit of repeating itself, and possibly not even our present Government would be optimistic enough to predict a continuance of present prices.”